[This analysis is inspired from the movie Moneyball.]
The following can be applied at any time, but it is particularly relevant in a buyer’s market.
Thesis
There is an epidemic failure in residential real estate for private home seller’s to understand the deeply flawed system of home sales dynamics. And this leads them to mismanage their home’s sale.
Private home sellers think in terms of buying real estate agents (paying commissions) but their goal shouldn’t be to buy agents, it should be to buy their home’s sale.
The driving force of selling a home is the leads. Your home must get on base (leads) a lot in order to score runs (offers).
It works like this:
- In order to buy your home’s sale you need to buy offers.
- And in order to buy offers you need to buy leads.
- And in order to buy leads, you need to buy an absolutely compelling narrative:
- Price (= 60%)
- Visual (= 30%)
- Copy (= 10%)
And these three narrative elements transform online searches into leads. No leads equals no offers. No offers equals no sales.
How the FSBO seller becomes ‘a card counter at the black jack table…and turns the odds on the casino’ is by utilizing the now available online tools to streamline the process and bring informational clarity to every step of the transaction.
When you lower your price 6% beneath fair market value, you are initiating a very powerful narrative. And you are doing it inside of two markets:
- On price against the quality-comparable homes.
- On quality against the price-comparable homes.
If your price or your quality does not make a clear and compelling case in the market, then you have to sit, wait and pray that someone falls in love with your floorplan…when, in fact, there are a dozen other interesting floorplans that would be just as suitable. And your listing agent may have half of them.
Agents are operating under their own motivations, just like everyone else. And their value can change, particularly in different conditions. But, regardless, selling your home is your responsibility. Own the process and position it strongly. Then let the market come to you.
Of course you can always list at fair market value, and either keep the money or use the 5-6% as negotiating room. Those strategies would be more applicable in a seller’s market, and they are so simple and obvious that they hardly need an exposition paper.
The Bottom line is this: freeing up money from the expense of agents’ commissions creates all kinds of opportunities to increase proceeds, negotiate and/or make a compelling case in the market.